Appeals court hears argument on Kentucky case


Attorneys on both sides of the Kentucky domain name dispute appeared before a three-judge panel in Louisville, Ky., this morning for the hearing on the appeal filed by iMEGA and the Interactive Gaming Council to overturn the forfeiture ordered by lower court judge Thomas Wingate last October.

The appeals court panel had earlier stayed the forfeiture hearing, previously scheduled for Dec. 3, to give them time to consider the issues raised in the briefs filed by the parties as well as in the amicus briefs filed by the Poker Players Alliance and a number of free speech organizations including the Electronic Frontier Foundation and the ACLU of Kentucky.

The appellate panel, comprised of Judges Michelle Keller, Michael Caperton and Jeff Taylor, heard oral arguments today during a 50-minute hearing, and then took the matter under submission.

With the holidays coming up, their opinion will likely not be released until after the first of the year.

At stake is not only the future of online gambling in Kentucky, but the larger issue of the right of any state to seize an Internet domain name of a registrar located outside of the state for an alleged violation of local law. This issue is at the heart of the free speech organization's opposition to the forfeiture order.

As stated by EFF Senior Staff Attorney Matt Zimmerman, "The court's theory - that a state court can order the seizure of Internet domain names regardless of where the site was registered - is not only wrong but dangerous."

According to Jon L. Fleischaker, the attorney representing iMEGA, there were three major issues discussed today. First was whether the lower court properly used the Kentucky seizure and forfeiture statute against the domain names - which is part of the Kentucky criminal code - in a civil proceeding.

Fleischaker argued that in order for Kentucky to use the statute in question, there first has to be a criminal complaint filed and then a conviction or a guilty plea. In other words, only after there is a finding of a violation of the criminal code could the seizure statute be used.

In the lower court, there had been no finding that the Web sites whose domain names were seized had violated any Kentucky criminal code.

As Fleischaker stated after the hearing, "It is not sufficient for the state or a lower court judge to decide on their own that there is a criminal violation - they have to go through a criminal proceeding first."

Fleischaker indicated that the appeals court panel seemed receptive to this issue and asked the attorneys to address how the state could obtain a criminal seizure and forfeiture order without first obtaining a criminal charge and conviction.

The panel also appeared to be receptive to the second argument raised by iMEGA's attorney, which focused on the applicability of the statute to domain names themselves. Fleischaker argued that the statute limited seizure to "gambling devices" - defined in the statute as a mechanical device such as a roulette wheel or a slot machine - and that a domain name is not a gambling device under this definition.

The judges questioned the attorney for the state whether the sequence of letters and numbers that make up a domain name could be considered a "gambling device." According to Fleischaker, the state responded that a domain name is a gambling device because it is the way to get to the online gambling site.

The judges also delved into whether the lower court's seizure and forfeiture order should be reversed because the state lacked jurisdiction over the domain names since the registrants of those names were not located in Kentucky.

Attorney William Johnson, representing some of the affected Web sites, argued that the sites were located offshore and that Kentucky cannot seize property that is not within its boundaries.

Attorney Eric Lycan, representing Kentucky, argued that Kentucky was within its rights to take action against the online gambling sites, which he described, according to a report from the Associated Press, as a "massive, global, offshore criminal enterprise" which violates the law of Kentucky.

Lycan argued that it was irrelevant where the registrants were located as their sites were accessible within the state.

One unexpected issue raised by the appellate panel was the fact that Kentucky gambling law is aimed at the purveyors, but not the players. Judge Michelle Keller asked Lycan why it is against the law in Kentucky to "promote" gambling, but it is not illegal to gamble.  With other illegal activities, she indicated, the law applies equally to all involved.

"It's illegal to sell the drugs and it is also illegal to use the drug," Keller said. "I don't see much of a difference here."

Lycan responded that the decision to criminalize the gambling operators, and not the players, was made by the legislature. "The legislature specifically exempted the player from the legislation," Lycan said, according to an AP reporter at the hearing.

Attorneys for the free speech organizations who had filed amicus briefs - EFF, the Center for Democracy and Technology and the ACLU-Kentucky - had applied to the court for leave to appear at today's hearing, but their motion was denied.

Also arguing at the hearing was attorney John Tate, representing the Interactive Gaming Council.

Attorney Fleischaker told PokerListings he was pleased with how today went "because the court was fully aware of the issues and gave us a good hearing."

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